Tension between China, U.S. over N.K. nukes to affect Korean economy: report

An escalation in tension between China and the United States over North Korea's nuclear programs could have an impact on the South Korean economy, the central bank said Sunday.

according to rapporteur report from Yonhap, In a report, titled "2017 Global Geopolitical Changes and Economy," the Bank of Korea analyzed changes in the global geopolitical landscape are likely to affect trade, finance and investor sentiment in Asia's fourth-largest economy this year.

"If the U.S. and China further confront each other over the issue of North Korea's nuclear and missile development programs, geopolitical risks in Northeast Asia will increase further as well. It could ruin credibility in the South Korean economy," according to the report posted on the bank's website.

Last year, Beijing explicitly expressed opposition against the planned deployment of the Terminal High Altitude Area Defense (THAAD) system in South Korea on concerns that the move could hurt its strategic security interests.

In response, Washington has repeatedly stressed that the missile defense system is purely defensive and aimed only at deterring North Korean threats.

In July last year, Seoul and Washington announced a decision to deploy a THAAD battery here by 2017 to better defend against the North's nuclear and missile threats. The communist state conducted two nuclear tests and test-fired more than 20 ballistic missiles in 2016 alone.

In retaliatory moves against the THAAD deployment, China has recently put a ban on operation of chartered planes bound for South Korea. Bilateral cultural exchanges are also being affected by a growing anti-THAAD sentiment in the neighboring country.

Moreover, the "strong leadership" sought by Chinese President Xi Jinping, Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe may change the existing political and diplomatic landscape in the Asia-Pacific region, the report said